The German and Danish government have reached an agreement to improve electricity trade between Denmark and Germany.
In recent years, electricity trade has been significantly low between Denmark-West and Germany due to grid congestions in Northern Germany. Good conditions for wind power in Northern Germany and Denmark have resulted in rapid deployment of renewables in the region, however, the grid development has not been able to keep pace with the deployment of renewables leading to reduced electricity trade capacities at this border.
Denmark and Germany have now agreed on a solution to this issue which will allow to increase trade between their countries while ensuring grid security.
The aim of the agreement is to gradually make the full capacity of interconnectors between Western Denmark and Germany available for electricity trade as soon as the relevant infrastructure development has been completed.
In the interim period, the cross-border electricity trade capacity available for the market shall be increased in a stepwise approach. For this, minimum available hourly capacities have been agreed. These will increase over time. In case the agreed minimum capacity cannot be physically transported due to grid constraints, countertrading will be used to avoid congestions in the grid while ensuring the agreed minimum level of trade in every hour. As grid development in Germany progresses, congestions will decrease, allowing a gradual increase in trade across the border.
The Danish Minister for Energy and Climate Lars Christian Lilleholt said to this agreement: "The agreement is a commitment to the European Energy Union based on an genuine internal energy market. Denmark supports the intention of building an integrated European power market to allow electricity to be traded freely across borders, based on competition and the best possible use of resources. This agreement between Denmark and Germany is an important step forward in solving the challenges that have impacted the interconnector between Germany and Denmark. However, it is important to timely realize the necessary grid development and make sure that infrastructure keeps pace with the rapid green transition of the electricity system and the potential of cross-border trade can be utilized. Taking the circumstances into account, Denmark considers a stepwise approach as a good solution".
The agreed minimum capacity shall be guaranteed as of July 2017. The minimum available capacity shall be incresed to 400 MW in November 2017. The minimum capacities are set at 700 MW in 2018, 900 MW in the first three month of 2019, 1000 MW as from 1 April 2019 and 1100 MW as from 2020. Denmark and Germany agreed that the costs of this measure should not exceed 40 Mio. Euro per year. If forecasts show that the costs may exceed this level, both parties will strive to find a common solution to adress this.
The agreement is between the Federal Ministry of Economic Affairs and Energy of the Federal Republic of Germany, the Danish Ministry of Energy, Utilities and Climate, Bundesnetzagentur and Danish Energy Regulatory Authority (DERA).
The relevant transmission system operators of both countries, TenneT and Energinet, will be jointly responsible for the implementation of this agreement.
The agreement shall be discussed with the European Commission.